Low budget retention rate stunts Saigon development

A major roadblock to development, inappropriate budget retention is preventing financial hub HCMC from addressing traffic jams and lack of schools.

With only 9 percent of Vietnam's total population, the southern metropolis contributes 24 percent of the country's GDP and 27 percent of the national budget, meaning each resident is contributing three times as much as those in other localities, said HCMC's Party Secretary Nguyen Thien Nhan Thursday.

However, the city only gets to keep 18 percent of its annual budget, hampering infrastructure investment and development, he said.

While international standards dictate a city's average road length be at least 10 km per square km, Saigon will only reach 2.1 km per square km by the end of 2020.

"The city would need 150 years to reach international standards. It has no money to build roads, the retained budget too little. With one million more people and motorbikes added every five years, traffic jams are a given," said Nhan.

Besides, the city needs 10,000 additional classrooms every half decade to keep pace with population increase, each classroom hosting a standard 30 students. Since this is impossible, it currently has to pack 40-60 students into a single room, he said.

The city plans to gain permission to raise its retention ratio to 24 percent in 2021-2025, and 33 percent in 2026-2030, the figure granted to the city in 2003, Phong added.

For decades, Saigon has been the country's largest moneymaker and assigned the highest state budget collection target.

Last year, it earned over VND378 trillion ($16.3 billion) in budget revenues, up 8.6 percent from 2017.

This year, it is expected to make VND412 trillion ($17.8 billion), roughly 27 percent of the national figure. Its initial target for the year, VND400 trillion ($17.29 billion), was 1.1 times higher than those of the remaining four federal municipalities, Hanoi, Hai Phong, Da Nang and Can Tho, put together, at VND365.9 trillion.